COURT FILE NO.: CV-17-580793

DATE: June 18, 2021

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Michael Hobson v. David William Turner and Yin Dawn Kan;

BEFORE: MASTER C. WIEBE

COUNSEL: Neil H. Roth for Michael Hobson; Michael Katzman for David William Turner and Yin Dawn Kan;

HEARD: May 27, 2021.

REASONS FOR DECISION

I. INTRODUCTION

[1] The plaintiff brings this motion seeking the following relief:

• Leave to bring this motion under Construction Act, R.S.O. 1990, c. C.30 (“CA”) section 67(2);

• Leave to amend the Statement of Claim and the Reply and Defence to Counterclaim to include a claim for contractual interest and damages in addition to the claim for lien;

• Leave to amend 39 of the 42 plaintiff answers to discovery undertakings entitled “Answers Re Extras;”

• Leave to amend the Scott Schedule re Extras to add two extras not previously listed;

• Leave to amend the Scott Schedule re Deficiencies by amending the values given by the plaintiff to four items by giving three a nil value and one a $100 value.

[2] The amendment concerning contractual interest was not contested. Mr. Hobson in paragraph 20 of his affidavit proposes to make seven changes to the Scott Schedule re Deficiencies which either withdraw or reduce those seven claims. These were also not contested.

[3] As for the other proposed amendments as listed above, the defendants oppose them on the grounds that they are withdrawals of admissions that should not be allowed and that they introduce new claims that are statute barred.

II. BACKGROUND

[4] In 2016 Mr. Hobson entered into three contracts with the defendants to do construction work on the home owned by the defendants. The third contract is the one in issue in this case. It is dated March 17, 2016. Mr. Hobson states in his affidavit that it was a fixed price contract with the fixed price being $260,085.32 (HST incl.).

[5] The defendants terminated the contract on May 18, 2017. On June 29, 2017 Mr. Hobson registered a claim for lien in the amount of $50,720.33. He served a Statement of Claim dated August 14, 2017. On November 7, 2017 the defendants defended this action and counterclaimed for damages of $320,000. Mr. Hobson replied to this pleading.

[6] There was a judgment of reference on February 6, 2018 and an order for trial on April 12, 2018. I became seized of this reference at the first trial management conference on October 15, 2018. I made orders for interlocutory steps that included production and discovery. I conducted several subsequent trial management conferences.

[7] On March 6, 2019, Mr. Roth wrote Mr. Katzman a letter wherein he outlined a detailed accounting of the plaintiff’s claim, which accounting showed that the claim was reduced to $30,698.14.

[8] Due to the Covid 19 pandemic, the discovery of Mr. Hobson was delayed and took place on July 15, 2020. At the seventh trial management conference on December 17, 2020, I scheduled a six- day summary trial in this matter commencing May 27, 2021 and set a schedule for the delivery of affidavits for evidence in chief. Mr. Hobson’s affidavits were due by March 5, 2021.

[9] On March 18, 2021 Mr. Roth wrote me a letter (copied to Mr. Katzman) advising that Mr. Hobson’s evidence had been served, that the plaintiff wanted to amend his pleadings, and that these amendments were opposed. I convened two trial management conferences. At the trial management conference on April 7, 2021 I vacated the trial schedule and scheduled this motion.

III. ISSUES

[10] Having reviewed the factums, authorities and heard the arguments, I believe that the following are the issues to be determined:

a) Should CA section 67(2) leave be granted?

b) Do the pleadings amendments concern “admissions”?

c) Should the pleadings amendments be granted?

d) What is the test for amending discovery undertaking answers?

e) Should the proposed amendments to the discovery undertaking answers be granted?

f) What is the test for amendments to Scott Schedules?

g) Should the proposed amendments to the Scott Schedules be granted?

IV. ANALYSIS

(a) Should leave under CA s. 67(2) be granted?

[11] Interlocutory motions not expressly provided for by the CA must obtain “consent” of the court in order to proceed. This is by virtue of CA section 67(2). Under that subsection, such “consent” should only be granted “upon proof that the steps are necessary or would expedite the resolution of the issues in dispute.”

[12] The defendants rely on the decision of Justice Valin in Seal Tech Basement Sealing Inc. v. Prychitko, 2014 ONSC 6038. In this case, a construction lien action, there was a series of deemed admissions by the plaintiff under Rule 51 of the Rules of Civil Procedure. The plaintiff moved to set aside the deemed admissions alleging that the deemed admissions were due to his inadvertence. The judge found that the test for leave under CA section 67(2) had not been met.

[13] As I read this decision, the judge essentially made the test for leave under CA section 67(2) dependent on whether the plaintiff met the test for setting aside admissions. He proceeded to determine whether that test for setting aside admissions had been met and found that it had not since he did not accept the evidence of an “inadvertence” by the plaintiff. Applying this approach, I believe I must move on to determine whether the amendments being sought here are withdrawals of admissions, and, if they are, whether the plaintiff has met the test for withdrawals of admissions.

[14] On the other hand, if I do not find that the pleading amendments concern admissions, I find the approach taken by the court in Seal Tech on the issue of leave instructive. The general rule for pleading amendments, Rule 26.01, would apply in that event. This rule specifies that the court “shall” grant leave to amend on such terms as are just unless prejudice would result that cannot be compensated for by costs or an adjournment. If this test can be met, the court should be hesitant to deny leave for the motion under CA section 67(2) for the simple reason that there is a necessity to put all issues between the parties properly before the court.

(b) Do the pleading amendments concern “admissions”?

[15] As I understand the evidence and the motion, the core of the plaintiff’s proposed pleading amendment concerns the accounting for two alleged extras, namely the installation of tiles and the hanging of doors by a trade named McCree. According to Mr. Hobson, this work was done while Mr. Hobson was on a long-planned vacation and, although originally a part of the Hobson scope of work, was agreed by the defendants to be paid to Mr. Hobson as an extra since the work was being done by the third party McCree to accelerate the project. Mr. Hobson alleges that the agreed upon price for the McCree work was $10,000. The McCree work was done and the defendants paid McCree directly. It is undisputed that McCree’s work was deficient and required redoing. Mr. Hobson alleges that the defendants got the tiles and doors replaced before he could get McCree to redo his work without charge, thereby thwarting Mr. Hobson’s ability to correct the deficiency.

[16] Mr. Hobson stated in his affidavit that in preparing the statement of claim he included the $10,000 receipt for this alleged extra but did not include the extra as a part of the value of his work as he felt morally responsible for the McCree deficiency having recommended McCree. Ms. Kan was examined for discovery on March 10, 2020. She produced emails about the McCree work in answer to undertakings. According to Mr. Hobson, while preparing his affidavit for trial he realized for the first time through these emails that the defendants were responsible for the McCree extra having deliberately thwarted Mr. Hobson’s effort to correct the deficiency. He wants to amend the statement of claim to add these two alleged extras to the claimed value of his work. He says this would increase his damage claim from the lien amount of $50,720.33 to $57,032.53. The difference between the two is a pure damage for breach of contract claim.

[17] Mr. Hobson wants to include two alternative pleadings. He wants to claim in the alternative that the McCree work was entirely a separate contract between the defendants and McCree, but that the tile and door work remained in the Hobson contract scope. This alternative, according to Mr. Hobson, produces a damage claim of $55,732.52. The second alternative describes the tile and door work as being outside of the Hobson contract scope leaving a damage claim of $54,432.52. The reason these alternatives are not below the lien amount of $50,720.33 is that, according to Mr. Hobson, there were other smaller errors in his statement of claim such as his assumption that what he was paid was the contract price when it was not, and the failure to account for the HST on the contract allowances. He wants to correct these errors in this amendment as well.

[18] Are the original pleadings intended to be amended “admissions” as contemplated by Rule 51.05? I find that they are not.

[19] Admissions to which Rule 51.05 applies are unequivocal concessions a party makes in a pleading, namely admissions of facts that assist the opposing side in proving its claim or defence. In Yang v. The County of Simcoe, 2011 ONSC 6405 there was a motion for leave to amend a statement of claim. The original statement of claim contained a version of the subject car accident that was favourable to the defendant. The plaintiff moved to allege a different set of facts and satisfied the court that the original pleading was based on an erroneous interpretation of key evidence that the defendants were aware of for some time. Justice DiTomaso found that the original pleading was an error and not an admission and stated the following in paragraph 46: “An admission contemplated by rule 51 occurs when the plaintiff admits that a set of facts were posed by the defendant is correct. An admission must be an intentional concession to the other side and not simply the result of the words chosen in the claim.” In Prince v. Atrium Property Management et al., 2021 ONSC 3318, the defendant was moving to amend statements in its defence admitting responsibility for defective stairs that resulted in an accident. The amendments denied such responsibility. Justice Vermette found that this was an admission, and stated in paragraph 43 that, “an admission is an unambiguous, deliberate concession to the opposing party.”

[20] The amendments Mr. Hobson proposes to amend are not concessions of facts posed by the defendants in this case. They are facts posed by Mr. Hobson concerning the nature and quantum of his own claim. Secondarily, they were also arguably done in error; but that is not central to my finding. The defendants of course denied those facts; but they do not have the onus of proving those facts, namely the existence of two extras and certain errors made in the accounting of the claim in the statement of claim. Mr. Hobson has the onus of proving those facts. Therefore, I find that they are not admissions to which Rule 51.05 applies.

[21] Mr. Katzman also argued that the Roth March 6, 2019 letter was an “admission.” I do not accept that proposition. This was a letter, not a pleading or a deemed admission pursuant to Rule 51.

(c) Should the pleading amendments be granted?

[22] As stated earlier, if the amendments are not withdrawals of admissions, and I have found that they are not, the test to be applied is the one in Rule 26.01. This is the general rule about amendments to pleadings. That rule requires that the court grant the amendments on such terms as are just unless there is prejudice that cannot be compensated by costs or an adjournment.

[23] I have already adjourned the trial. The issue is whether the defendants will be prejudiced in a way that cannot be compensated in costs.

[24] The defendants allege that the amendments introduce new causes of action that are now statute barred under the Limitations Act. A leading case on this subject is the decision of the Court of Appeal in Klassen v. Beausoleil, 2019 ONCA 407. In paragraph 26 the Court reiterated the principle that new claims that are statute barred cannot be added by amendment as to do so would be a form of non-compensable prejudice to the other side. It then went on to discuss what new causes of action are for the purpose of this rule. In paragraph 28 Justice Harvison Young stated the following:

An amendment does not assert a new cause of action – and therefore is not impermissibly statute-barred – if the “original pleading … contains all the facts necessary to support the amendments … [such that] the amendments simply claim additional forms of relief, or clarify the relief sought, based on the same facts as originally pleaded”: . . . Put somewhat differently, an amendment will be refused when it seeks to advance, after the expiry of a limitation period, a "fundamentally different claim" based on facts not originally pleaded . . .

[25] In paragraph 30 the judge made this important statement: “In the course of this exercise, it is important to bear in mind the general principle that, on this type of pleadings motion, it is necessary to read the original Statement of Claim generously and with some allowance for drafting deficiencies: Farmers Oil and Gas Inc. v. Ontario (Ministry of Natural Resources), 2016 ONSC 6359, 134 O.R. (3d) 390 (Div. Ct.), at para. 23.”

[26] The original Hobson Statement of Claim in this matter made general allegations. He alleged a construction contract between the parties, additions to the contract scope, deletions from the scope, and contract repudiation by the defendants. He alleged that $50,720.33 remained owing under the contract. He did not particularize the extras. In his Reply in paragraph 8 Mr. Hobson referred to one of the accounting errors he now seeks to correct but added that “the amount claimed remains correct.”

[27] Using the analysis outlined in Klassen I fail to see how Mr. Hobson’s proposed amendments are a “fundamentally different claim.” Mr. Hobson refers to extras generally in the statement of claim without particularization. The proposed amendments particularize two such extras that Mr. Hobson says he failed to account for in his original pleading. This is an additional form of relief or a clarification of the relief sought stemming from the original pleading, to use the wording from the Klassen decision. It is not a new cause of action.

[28] As to other potential non-compensable prejudice, there was none in my view. Mr. Hobson has delivered his trial affidavit evidence. The defendants have not. They will be given a right to plead in response to the amended statement of claim and to discover Mr. Hobson on these issues, all before they deliver their evidence in chief.

[29] Therefore, I grant Mr. Hobson leave under CA section 67(2) to bring this motion as the amendments are necessary to clarify the issues between the parties stemming from the evidence.

[30] Therefore, I also grant leave to Mr. Hobson to make the requested pleading amendments.

(d) What is the test for amending discovery undertaking answers?

[31] Mr. Hobson also wants to amend several answers to his discovery undertakings concerning extras. He wants to add the above noted extras. He also wants to amend a whole series of answers in the column entitled, “price determined,” changing the phrase “fixed price” to wording more consistent with the idea of a cost-plus arrangement. He says he misunderstood the term “fixed price” as that did not apply to the facts.

[32] The defendants assert that statements made in answer to discovery undertakings are formal admissions to which Rule 51.05 applies. I do not agree. Rule 51.05 expressly applies only to responses to requests to admit, deemed admissions under Rule 51.03, and admissions made in pleadings. Answers to discovery undertakings are not such admissions.

[33] Discovery undertakings are a part of examinations for discovery. They are solemn promises made at discovery under oath to obtain evidence or information. The rules concerning examinations for discovery expressly refer to discovery undertakings and require that they be complied with; see Rule 31.07. Answers to undertakings, therefore, have the status of discovery evidence.

[34] Discovery evidence can contain admissions that the opposing party can rely upon. Indeed, as indicated in Rule 31.11, discovery evidence concerning the opposing party can be read into the record at trial as a part of a party’s case and can be used to impeach the opposing party. But these discovery admissions are not pleadings admissions to which Rule 51.05 applies.

[35] If these discovery admissions are to be changed there is a separate rule that applies, namely Rule 31.09. This rule specifies that where a party discovers that a discovery answer is wrong or incomplete, the party must “forthwith” correct the answer in writing and send that writing to every party. Under Rule 31.09(2) this change creates a right in the opposing party to a further discovery on the change.

[36] There are consequences if this rule is not complied with. Rule 31.09(3) specifies that where a party fails to comply with this obligation and the new information is favourable to the party, the party cannot introduce the information at trial except with leave of the trial judge. Rule 53.08 specifies that the trial judge must permit the change on such terms as are just and with an adjournment if necessary, unless to do so would cause prejudice to the opposite party or would unduly delay the conduct of the trial. Changes to admissions made by answering discovery undertakings should in my view have to meet the same test.

(e) Should the proposed amendments to the discovery undertaking answers be granted?

[37] As we are effectively in the middle of the trial, I apply Rule 53.08. Having already adjourned the trial hearing to a date yet to be determined, the issue is the potential prejudice to the defendants from the amendments.

[38] Since I have allowed the amendments to the Statement of Claim concerning the two new extras, I have no choice but to allow the proposed amendments to the discovery undertaking answers to include these two extras. I do so.

[39] There was an argument that the change in the description of the extras from “fixed price” to essentially cost-plus arrangements amounted to a new cause of action that is statute barred thereby creating non-compensable prejudice to the defendants. I do not accept that argument. As stated above, extras were pleaded although not specified in detail. Using the words in Klassen, the proposed change is simply a clarification of the existing claim for extras.

[40] There was no other evidence of prejudice to the defendants here. These changes may require further pleading, production and discovery by the defendants; but that can all be accommodated with a new schedule and with costs. Importantly, the defendants have not served their trial evidence.

[41] As to the question of leave under CA section 67(2) concerning this aspect of the motion, I have no trouble granting such leave. Having already granted leave for the pleading amendments concerning the two extras, I find it “necessary” to correct the discovery undertaking answers in this regard. As for the changes concerning the “fixed price” answers, having found that there is no prejudice to the defendants in allowing these changes, I find that this part of the motion is “necessary” to get clarification of Mr. Hobson’s position.

[42] I grant leave to make these requested changes.

(f) What is the test for amendments to Scott Schedules?

[43] I ordered a Scott Schedule in this case. The parties created two, one concerning deficiencies and the other concerning extras. Mr. Hobson wants to amend the Scott Schedule concerning extras to incorporate the two new extras. He wants to amend the Scott Schedule concerning deficiencies by changing his entries on four items involving the tiles and doors to a nil amount to reflect his position on these extras, and by changing a fifth item concerning the deck from $1,000 to $100.

[44] Scott Schedules are charts used in construction cases with many issues wherein the parties break down their claims and defences on an issue-by-issue basis and provide a detailed accounting on an issue-by-issue basis. I view them as being particulars of positions meant to guide the obtaining, organizing and presenting of the evidence. In a leading construction law case, Urbacon Building Groups Corp. v. Guelph (City), 2009 CanLII 72065 (ONSC), Justice Corbett in paragraphs 14, 15 and 16 described Scott Schedules as a “standard tool for organizing construction lien cases” with many issues. He also said that they are “detailed maps” to the claims asserted and defences raised on an issue-by-issue basis and become the “outline for the evidence” at trial.

[45] Scott Schedules are not pleading particulars, namely particulars that are required to make claims understandable to plead in response. One does not need Scott Schedules to complete pleadings. But, as stated by Justice Corbett, Scott Schedules are detailed statements of “position” to provide structure for the evidence.

[46] As the purpose of Scott Schedules is to obtain, organize and present the evidence, I believe it is more appropriate to apply the test for correcting discovery evidence (Rule 31.09) to changes to Scott Schedules. It would be inappropriate per se to require that parties seek the consent of the opposite side or leave of the court for all changes made to Scott Schedules. This applies even to statements that may be factual concessions to the other side and that may qualify as admissions if made in pleadings. In my view, neither the test for admission withdrawal in pleadings nor the general test for pleading amendment would be appropriate for Scott Schedules. Scott Schedules are intended to give detailed structure for the evidence, not define the core issues in dispute.

[47] On the other hand, if there are changes to Scott Schedules that introduce new claims or defences, that would be different, as that would engage the pleadings and Rule 51.05. Also, if Scott Schedules are created in construction lien proceedings pursuant to court order, there may be a requirement to seek court leave in any event for that reason. Changes made to Scott Schedules outside of the time limits given by the court may be a violation of the court order. Furthermore, these documents are statements of position created by several parties not just one, and changes may require a re-scheduling order.

(g) Should the proposed amendments to the Scott Schedule be granted?

[48] Concerning the Hobson Scott Schedule changes concerning the new extras, I am driven to the conclusion that these amendments to the Scott Schedule are needed to accord with the pleadings and the discovery evidence and must be granted. The change concerning the deck deficiency is of no great consequence and was not disputed. There was no evidence that the defendants will be prejudiced by these changes. If the defendants wish to have further production and discovery, the court will make a reasonable accommodation and will consider costs.

[49] As to the issue of CA section 67(2) leave, I find similarly that these Scott Schedule changes are “necessary” to accord with the Hobson pleading amendments and the discovery evidence.

[50] I grant leave to Mr. Hobson to make the requested changes to the Scott Schedule.

CONCLUSION

[51] For the reasons stated above, I grant the entirety of the plaintiff’s motion.

[52] Concerning costs, as directed, the parties served and filed costs outlines. They did so. The plaintiff’s costs outline shows $2,841.95 in partial indemnity costs. The defendants’ costs outline shows $8,382.51 in partial indemnity costs.

[53] I will entertain submissions on costs thrown away in this reference due to this motion and the adjournment of the trial hearing. Such submissions can and should be included with the parties’ written submissions on costs of the motion.

[54] Concerning the costs of this motion, costs usually follow the event. Mr. Hobson succeeded in this motion. However, his conduct led to this motion and the adjournment of the trial hearing.

[55] If the parties cannot agree on costs, Mr. Hobson has up to and including June 28, 2021 to serve and file written submissions on costs of no more than four pages. In that event, the defendants have up to and including July 8, 2021 to serve and file responding written submissions on costs of no more than four pages. Mr. Hobson will have until July 13, 2021 to serve and file reply written submissions on costs of no more than three pages.

[56] At the ninth trial management conference on April 17, 2021 I vacated the trial hearing dates scheduled for late May and early June, 2021 on account of this motion, scheduled this motion, and scheduled the next trial management conference to take place on June 11, 2021 at 10 a.m. On June 9, 2021 Mr. Katzman sent an email requesting a rescheduling of the 10th trial management conference due to a sudden medical appointment. As a result, I rescheduled that trial management conference to take place on July 2, 2021 at 10 a.m. by teleconference.

[57] At the trial management conference on July 2, 2021, I intend to give directions for any further pleading, production and discovery arising from this motion in addition to directions rescheduling the trial hearing.

DATE: June 18, 2021 __________________________

MASTER C. WIEBE